Fasten your seat belts. The deal-making for the $US10 billion Formula One auto racing empire has already taken more than a few sharp turns as a result of accusations of bribery, collusion and corruption.

And the race is not over. A private equity firm is now challenging Formula One’s 2005 sale in a lawsuit filed in New York.

Formula One has long been identified with
Bernie Ecclestone
, an 82-year-old Englishman referred to in the British tabloids as “F-1 Supremo." He built the business, starting as a trader of motorcycle parts. Yet the controlling stake in the Formula One companies had been held by the German media magnate Leo Kirch.

In 2002, Mr Kirch defaulted on loans secured by the stake, and three banks – JPMorgan Chase, Lehman Brothers and BayernLB, a bank controlled by the German state of Bavaria – became the owners of Formula One.

Not equipped to run a racing empire, the banks probably just wished to sell the stake at a face-saving price. But as long as they owned it, they needed Mr Ecclestone to operate the business. And Mr Ecclestone just wanted to be in control.

A standoff existed until 2005, when CVC Capital Partners, a British private equity firm, announced that it had acquired the banks’ stakes for $US1.25 billion. For good measure, CVC also paid hundreds of millions of dollars to acquire part of the Formula One interest held by a Liechtenstein trust named Bambino, which had been set up to benefit the Ecclestone family.

The Formula One investment has proved spectacularly successful. Since its purchase, CVC has paid itself $US2 billion in dividends, sold part of Formula One in May for $US2.5 billion and, according to the data provider Standard & Poor’s Capital IQ, still owns a 42.4 per cent stake. This year, Formula One filed for an initial public offering on the Singapore stock exchange, with an intended valuation of as much as $US10 billion. Mr Ecclestone’s net worth is estimated at $US2.4 billion.

But this enormously rewarding investment may now be in jeopardy.

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In 2011, the German media reported accusations that the deputy chief of BayernLB, Gerhard Gribkowsky, had taken a $US44 million bribe from Mr Ecclestone in connection with the sale of Formula One. Mr Gribkowsky was responsible for the disposition of the bank’s 47.4 per cent interest in Formula One.

Mr Gribkowsky was charged with bribery, embezzlement and tax evasion. At the banker’s trial in Munich last year, Mr Ecclestone testified that Mr Gribkowsky was “shaking him down," and that the payment was made to prevent Mr Gribkowsky from claiming to the British tax authorities that Mr Ecclestone controlled the Bambino trust, something that would invalidate the ability of the trust to hold the Formula One stake tax-free.

Mr Ecclestone denied that he controlled the trust, but said he and the trust made the payment to ensure the banker’s silence. Mr Gribkowsky was convicted on charges of tax evasion, bribery and embezzlement this year and sentenced to eight and a half years in prison. But that was not the end of the legal mess.

Last month, Bluewaters Communications Holdings, which in 2005 was a competing bidder for Formula One, sued Mr Ecclestone, CVC and BayernLB in New York State Supreme Court.

Bluewaters claims that Mr Ecclestone’s payment was made in order to have Mr Gribkowsky steer the sale of Formula One to CVC, Mr Ecclestone’s favored buyer. Bluewaters was backed in its bid by $US1 billion in financing from Apollo Global Management and King Street Capital Management.

Bluewaters contends that it bid $US1 billion for the stakes held by three banks, less than what CVC paid. Yet the firm says it also offered to pay “10 per cent more" than any other bona fide offer. In other words, Bluewaters agreed to outbid the highest bidder. It was a crazy, aggressive strategy that few bidders would even dare to undertake, and it might be that Mr Gribkowsky and the other banks simply did not take the bid seriously.

But in its complaint, Bluewaters said its offer had been ignored because Mr Ecclestone did not trust Apollo, which he viewed as being too hard to work for, and because of his preference for CVC’s bid. Moreover, Bluewaters claimed BayernLB had paid Mr Ecclestone $US41.4 million from the funds it received from CVC in order to then pay Mr Gribkowsky to steer the bid to CVC.

A representative for CVC did not respond to requests for comment. But Mr Ecclestone has told Pitpass, a racing news Web site, that the money was paid to him for an indemnity from him for any mistakes in Formula One’s financial records, not as a payment for Mr Gribkowsky.

Bluewaters is claiming at least $US650 million in damages, the lost profit it would have earned had it bought Formula One. And there are others who appear to believe the payment to Mr Gribkowsky was for more than silence.

At Mr Gribkowsky’s sentencing, the judge stated that “in this process we assume the driving force was Mr Ecclestone," a sentiment also expressed during trial by the prosecutor, who asserted that Mr Ecclestone was an “accomplice in an act of bribery."

On the heels of Mr Gribkowsky’s conviction, BayernLB has demanded that Mr Ecclestone pay it hundreds of millions of dollars to reimburse it for its losses related to the payment.

German authorities and British tax officials are reportedly investigating, though Mr Ecclestone has not been accused of any wrongdoing in Germany or Britain.

In response to a request to Mr Ecclestone for comment, his office said he was travelling and could not be reached before deadline.

Mr Ecclestone, an outsize personality, built the Formula One franchise over decades. It is hard to envision any situation in which he would willingly give up control of his baby.

Still, the accusations show that something went terribly awry in the sale of Formula One.

As the investigations gather steam, it is unclear what will happen to the company. In large measure, Formula One is Mr Ecclestone. It is a league dependent on race organisers, many of whom are Mr Ecclestone’s friends and peers. If he is not involved to orchestrate the league, there is no clear successor to manage these relationships.

Formula One acknowledged in its Singapore IPO. prospectus that was highly dependent on Mr Ecclestone. Market turmoil in June led Formula One to abandon its initial offering. And Mr Ecclestone is still intimately involved: the Bambino trust holds 8.5 per cent of Formula One, and he owns 5.3 per cent.

Formula One, with more than 30 subsidiaries and intricate relationships with race sponsors, has been criticised for its complex ownership structure. Now it is the ownership itself that is coming under attack.

This is a troubled time for CVC and Formula One. They risk losing Mr Ecclestone as they become embroiled in multiple investigations. And it will certainly be much harder to take the company public or sell it.

Ultimately, though, this is a lesson in deal-making and how the machinations surrounding any sale can lead those involved to extreme measures, even possibly illegal ones. And when the deal-making is in the billions and all dependent on one man, there is even more room for foolhardy errors, a pile-up that can only come back to haunt those involved, as CVC may be finding out.